|Moderated By: Crossy -- (Not Moderated) -- Started: 8/26/2003 2:53:46 PM Revision History|
HEALTH & NUTRITION SYSTEMS - HNNS $0.22 (OTC/BB)
This stock is in my current portfolio selection
of more or less highly speculative stocks :
HNNS is a company in the weight reduction products area. The problem of widespread obesity in the US, enabled the phenomonal growth in the American weight reduction market. One indication of this is probably the spectacular story of Medifast (Amex: MED) which had great commercial sucess success, quadrupling it's sales levels from 2001 to 2003. It's stock rose from $0.30 to $13 enabling the firm to leave the OTC/BB and obtain a listing on the Amex Exchange. If HNNS has similar success then it could similarly produce outstanding returns to shareholders
Exchange Listing : OTC/BB OTC Bulleting Board
Ticker : HNNS - las quote - $0.22
Beta 1.10 Avg volume 7k (3mt avg) 12k (10d avg)
Outstanding 3.63M sh# Float 2.70M sh# M.Cap $1m
Sales (ttm) $3.79M EBITDA (ttm) $168.0K
Per Share Data:
Book Value -$0.19 Earnings $0.02 (TTM) $0.03 (MRQ)
Sales (ttm) $1.05
PE 10.42 (Price / Earnings TTM) - PSR 0.24 (TTM)
The company became solidly profitable recently and seems poised to invest in advertising and promotion. Unlike Medifast they employ the MASS MARKET channel (WalMart, RiteAid etc.) instead of a dedicated network or an affiliation channel. All products are manufactured in cGMP facilities, like a pharmaceutical, and thus can be classified as "premium quality" in their respective segments.
Negative press surrounding Ephedra led to special charges last year associated with reformulation costs and a partial prodcut recall. Tangible Equity is still negative however the company initiated a turnaround strategy and is now profitable let alone cashflow positive - which should allow them to obtain positive shareholder'S equity over the course of time. Liquidity concerns were alleviated by obtaining vendor financing from their largest supplier on rather favourable terms, in exchange for an exclusivity supply status.
Health & Nutrition Systems International, Inc. (HNS) develops, markets and sells weight management, energy and sport nutrition products to national and regional, food, drug, health, pharmacy and mass-market accounts, as well as to independent health and pharmacy accounts. HNS product sales consist of three primary dietary supplements: Acutrim Natural, Carb Cutter and Thin Tab Mahuang Free. Acutrim Natural is a dietary supplement that uses a special blend of natural ingredients to help the consumer burn fat by supporting healthy carbohydrate and fat metabolism. Thin TabMahuang Free offers the same benefits as Thin Tab in an ephedra-free formula. CarbCutter helps convert carbohydrates into energy. The Carb Free Blend activates a cellular transport system that shuttles newly consumed carbohydrates into the cells where it then can be metabolized for energy instead of being stored as fat.
As of March 15, 2003, the Company stopped selling two products, ThinTab and Fat Cutter Plus, which contained ephedra, because of negative publicity related to the use of ephedra. Retailers that purchased those products from the Company may, however, continue to sell them from their inventory. A third product, Carbolizer, was transferred to a third party as part of a larger general settlement of pending litigation. Carbolizer also contained ephedra. In 2002, these three products accounted for 19% of the Company's total revenue.
HNS' customers are predominantly drug, health food and mass retailers that then sell the Company's products to the retail consumer. HNS has approximately 15 drug, health food and mass retailer customers that collectively comprised 87% of its gross revenues in 2002. Its largest customers are GNC, Wal-Mart, Walgreens, Rite Aid, Target and Eckerd.
Garden State Nutritional (GSN), a division of Vitaquest International Inc., is the only manufacturer of the Company's products. GSN provides a certificate of analysis for each of HNS' products, which gives laboratory test results performed by GSN that verify product quality and ingredients.
In order to enhance consumer confidence in its products, during 2001, HNS initiated and completed independent clinical testing of each of its products. These double-blind placebo trials were conducted by Marshall-Blum LLC, an independent research company with 20 years of experience in product testing. Marshall-Blum follows strict clinical guidelines to assist with product compliance with applicable regulations and scientific standards.
Competitors include Atkins Nutritional, Twinlabs, Metabolife International, Inc, Rexall Sundown, Dexatrim, Natures Bounty and Slim Fast.
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